FINRA Series 7 General Securities Representative Qualification Examination (GS) Series-7 Question # 71 Topic 8 Discussion
Series-7 Exam Topic 8 Question 71 Discussion:
Question #: 71
Topic #: 8
Under the terms of the 1970 Securities Investor Protection Act, what is the status of a customer whose account assets exceed SIPC insurance coverage when his broker/dealer becomes insolvent?
A.
the US Treasury is pledged to make up the deficiency
B.
all broker/dealers are assessed to fully satisfy the deficiency
C.
the customer becomes a general creditor of the insolvent firm for the amount of deficiency
D.
SIPC will issue a debenture to guarantee eventual repayment of the deficiency
the customer becomes a general creditor of the insolvent firm for the amount of deficiency. After the SIPC coverage is exhausted, the customer becomes a general creditor. Due to the insolvency of the broker/dealer, there is no likelihood of the customer receiving restitution.
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